Mass layoffs are like a terror attack
''There will be time for them to make profits, and there will be time for them to get bonuses. Now's not that time,'' President Barack Obama said of Wall Street executives.
Would that he had said the same about layoffs.
The Labor Department reported Friday that nearly 600,000 American incomes were eliminated in January, nearly 60,000 of them in a single day. That day was Jan. 26., less than a week after the new young president exhorted America to pick itself up, dust itself off, and begin the work of rebuilding.
Barack Obama's "yes we can" was answered with a withering "no we can't" from employers in what's being called the Quitter Economy. Many of them had the time and resources to let the nation catch its breath instead of aggravating the emergency. They could have given the federal government time to reboot the banking and credit system, pass a stimulus bill, and get the new job programs up and running.
Instead, they took one look at fourth-quarter earnings reports and bolted, sending out a wave of hurt, fear and paralysis as destructive to the national security as a terror strike.
People want to believe that employers only use layoffs as a last resort. New York Times reporter Catherine Rampell began her lead story Jan. 27 this way: "Furloughs, wage reductions, hiring freezes and shorter hours simply did not do enough. A year into this recession, companies across the board are resorting to mass job cuts."
But there was no evidence in the story that any of the companies had tried any of those half-measures. Pfizer Inc., for example, announced it was acquiring Wyeth Pharmaceuticals for $68 billion and would lay off 20,000 employees, 8,200 of them right away. It was just buy-and-close. Microsoft announced it was simply laying off 5,000.
Could Pfizer have held off for a while on those 8,200 layoffs? Could Microsoft have sucked up the 5,000 layoffs and put its chips on recovery for the rest of 2009?
In Wisconsin, Quad/Graphics, the world's largest privately-held printing company, laid off 550 workers on five days' notice in January, 400 of them in-state. Here's what President and CEO Joel Quadracci had to say:
"This is a strategic move, made from a position of financial and industry strength. Quad/Graphics continues to have industry-leading profit margins, and because we have maintained our investment grade credit quality, we have plenty of access to capital markets that will ensure our strong position within the industry for a long time."
In other words, they weren't forced to do this right now, they just could.
Publicly traded companies are even quicker to cut jobs. New York Times business columnist David Carr wrote on Dec. 8: "Nobody fears getting caught out on a down cycle more than those who run public companies, and defensive layoffs -- not based so much on current realities but on horrors to come -- have become the norm. Last week, speaking at the Reuters Media Summit, Barry Diller, the chief executive of IAC/Interactive, chided the leaders of entertainment economies for the kind of panic and greed-driven 'right-sizing' that was anything but.
" 'The idea of a company that's earning money, not losing money, that's not, let's say, "industrially endangered," to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one's counting is really a horrible act, when you think about it, on every level. First of all, it's certainly not necessary. It's doing it at the worst time. It's throwing people out to what is inevitably a larger unemployment heap for frankly no good reason,' he said, adding:
" 'It's not that you don't want to earn as much money as you can - it is your obligation, of course - but companies have obligations beyond that at certain times, in the times in which they operate."
What are today's operating conditions?
Unemployment is now driving 80 percent of the new wave of home foreclosures in California, the Los Angeles Times reports. Layoffs are setting up the next big meltdown - credit card debt.
Layoffs are wrecking the budgets of state and local governments, costing them income and sales tax revenues and also adding to their costs of unemployment insurance, food assistance, heat assistance, health care, and public safety.
Layoffs are killing the willingness to consume and support recovery not only of the unemployed but of those "left behind" in shell-shocked offices and on shop floors. If surviving workers are not being speeded up, they're being hit with unpaid furloughs and told to "look busy" to avoid the evil eye.
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IS THERE a bright side to this picture? Yes there is. It is employers that are doing whatever it takes to weather the recession without making human sacrifices to appease lenders or impress Wall Street analysts.
Toyota said Saturday it would honor its 59-year-old no-layoff policy despite the prospect of large expected losses in 2009.
"We will never fire those employees against their will," senior managing director Takahiro Ijichi said. "We have never done that."
This month SC Johnson of Racine, Wis., is honored for the seventh straight year by Fortune magazine as one of the "100 Best Places to Work in America."
Sam Johnson, the late emeritus chairman, told a Milwaukee audience in 2001 the advantages of running a family company: "You don't have to enchant Wall Street. You don't have to lay off people at the first sign of a downturn. You can manage for the long term."
During the Depression years, Johnson Wax actually de-mechanized some production lines and went to hand-packing to keep everyone at work. It wasn't efficient but it paid off in loyalty and productivity.
The tradition continues. Fortune notes, "during the financial crisis CEO Fisk Johnson sent a cheer-up card to all employees and gave them a two-day holiday break extension."
What a refreshing message: Fear not.
